Macroeconomic Variable and Stock Market Performance in Kenya
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Date
2023-11
Authors
Gure, Issack
Mutswenje, Vincent Shiundu
Journal Title
Journal ISSN
Volume Title
Publisher
IAJEF
Abstract
The stock market is essential to a country's
economic growth as it provides platforms that
enable the companies to trade publicly and
raise capital. This enables the transfer of
capital and ownership to be regulated and
secure environment for trade, thus promoting
investment. This implies that strong
performance positively affects business
growth and expansion operations, which in
turn generates jobs for the economy. Given
the significance of stock market performance
to the economy, any changes to that
performance undoubtedly had an impact on
the economy. Because of this, the researcher
examined the effects that changes to
macroeconomic conditions have on Kenya's
stock market performance with specific focus
on how inflation affect the stock market
performance. The arbitrage pricing theory and
Fisher theory were applicable. Explanatory
research design was employed. Secondary
data was gathered from the years 2017
through 2021 from the Nairobi Securities
Exchange as well as the Kenya National
Bureau of Statistic. Diagnostic tests were run
to check for any violation of the regression
analysis. Time series regression model was
applicable for this study where both
descriptive (mean and standard deviation) and
inferential statistics were analyzed. The
researcher kept ethics in mind throughout the
investigation. The study findings were
presented through graphical, pictorial
representation, tables, and percentages.
Inflation had a statistically significant impact
on Kenya's stock market performance and was
thus the hypothesis was rejected. In order to
combat inflation, the study recommends
employing a contractionary monetary policy,
which is a method for doing so. A
contractionary policy aims to lower the
quantity of money available in an economy by
lowering bond prices and boosting interest
rates. Price decreases, slower inflation, and
less consumption follow as a result.
Description
Article
Keywords
Macroeconomic Variables, GDP, Inflation, Interest Rate, Stock Market Performance
Citation
Gure, I., Mutswenje, V. S. (2023). Macroeconomic variable and stock market performance in Kenya. International Academic Journal of Economics and Finance, 4(1), 87-98.